An annual survey of law firms has revealed that one in three is at financial risk due to falling profits.
Profit margins have fallen for all groups of firms outside the top 10, according to the 2013 Annual Law Firms’ Survey.
Many law firms have seen their income drop significantly as a result of changes to the way in which legal fees are recovered in personal injury cases. In particular, the introduction of Damages Based Agreements in place of Conditional Fee Agreements has meant that the winning solicitor’s ‘success fee’ – previously a bonus payment claimed from the opposing party – is now taken as a percentage of the damages awarded. This has resulted in solicitors having to undercut each other in order to win business as clients become more conscious of the cost of bringing a claim, impacting on the law firm’s income.
Additionally, many smaller firms were left struggling to secure professional indemnity (PI) insurance last month after renewal rates soared by as much as 40 per cent.
At Milsted Langdon, we have already helped a number of law firms avoid going under so we have considerable experience in this area.
Our business turnaround experts have acted on behalf of clients in all areas of law, including solicitors’ firms and barristers, so we understand the challenges facing the legal profession today.
We also have a proven track record of helping to broker mergers in which smaller practices are absorbed into larger firms on favourable terms, should this be the most appropriate option.
For further information, please contact us.